Daily Market Report

09/03/2023
11:46

Following Tuesday’s sharp decline, US major stock indices managed to stabilize yesterday while the US Dollar remain steady as market participants are trying to readjust future interest rate expectations.

FED chair Powell fueled fears of potential higher rate hikes after mentioning that a 50bps hike remains highly possible. The latest economic data have come in stronger than expected which suggests that interest rates are likely to be higher than previously anticipated.
In the meantime, the FED is prepared to act according to future economic data.

Later today, a few economic releases are expected. In the US, initial jobless claims are set to rise from 190K to 195K while in Canada, BoC senior deputy governor Rogers is due to speak.

Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro bounce faded yesterday at the hourly resistance of 1.0575 which represents a formerly broken support.

Looking at the short-term price action, the momentum turned bearish after the recent failure from the 1.0700 psychological barrier mentioned in our previous reports, meanwhile, the pair is testing important daily support which stands at 1.0530 and we will be looking for buyers’ reaction in the coming hours.

A successful bounce is likely to push prices back up in the direction of the 1.0575-1.0600 zone, on the other side, a breakdown below 1.0530 should trigger a new sell-off toward the next support of 1.0480.

From a wider angle, the trend is bearish, and the upside is expected to stay limited while prices continue to trade below the 1.0600 level.

GBPUSD

The British pound suffered from heavy selling pressure after breaking below key support at 1.1920.

As of now, the trend remains bearish, and traders should focus on the near-term resistance of 1.1860 for a continuation to the downside that can extend toward 1.1800 support.

When looking at the latest price developments, we can see that sellers succeeded to push the pair below the lower band of the recent trading range that was located between 1.2145 and 1.1920 levels which reinforces the negative outlook.

To conclude, we might see price stabilization in the coming hours due to the lack of important economic releases from the UK, however, if the pair fails to overtake the 1.1860 resistance, the technical picture will remain unchanged, and another decline can be anticipated.

USDJPY

The pair extended its advance as buyers managed to keep prices above the 135.35-135.00 support zone.

Since forming a bottom on February 14th, the uptrend took the form of a series of higher and higher lows, keeping the technical picture positive. Yesterday, we have seen a corrective decline that reached the 50% Fibonacci retracement of the recent upside move that started from the 135.35 low. After that, we have seen a strong bounce reinforcing the bullish momentum.

For the time being, the key level of support stands at 136.50 and if prices continue to hold above it, another retest of 137.90 peak cannot be ruled out.

USDCAD

After a successful breakout above the 1.3665-1.3685 resistance zone, the pair rallied on rising demand.

In the short-term, prices are testing an important resistance located at the 1.3810 level, and from where we can find sellers in the coming hours. However, it is important to note that any drop is likely to be temporary before the advance resume.

Technically, the nearest support stands at the 1.3650 level while the key resistance lies at 1.3810 followed by the 1.3855 level in extension.

To conclude, the momentum remains strongly positive in this pair and traders should wait for a potential short-term decline before looking for another wave higher.

GOLD

Gold recovery stalled near the hourly resistance of $1860 highlighted in our previous analysis on the back of a stronger dollar.

After breaking below the rising trendline shown in the chart below, the yellow metal traded sharply lower and we have seen a stabilization below the 1830-1823 support zone, which will likely turn into a resistance zone in the future. Therefore, the trend has turned negative, and traders should focus on $1823 in the coming hours as the key barrier for prices.

On the other hand, a strong support zone stands between the 1809 and 1805 levels and while gold continues to trade above it, the short-term price action is expected to be sideways.

Economic Analyst
Amine Hiani